Posted on 10/03/2013 3:17:32 AM PDT by Mozilla
David Buckner, the founder and CEO of Bottom Line Training and Consulting, an adjunct professor at Columbia University, and the author of “Permission to Think,” explained on the Glenn Beck Program Wednesday why America hasn’t yet seen hyperinflation — but why it could be just around the corner.
Buckner said that in discussing hyperinflation, people often refer to the Weimar Republic, Zimbabwe, and Bolivia, but say “it could never happen here” because a “certain kind of layering has to occur” that America hasn’t seen.
That layering, he said, or the “recipe” for hyperinflation, is:
1) Economic Implosion
2) Collapse in tax revenues
3) Raise taxes
4) Lenders unwilling
5) Austerity or print
Beck seemed shocked by the list, saying all five have occurred.
But Buckner said some still squabble about certain points in the list — and regardless of whether we satisfy the recipe, people still say three things in America are “different,” and set us apart from the standard formula.
First, it is said that “everyone wants to buy our debt,” and no one will ever stop wanting to do so. But Buckner countered that China is already quickly shifting our debt quickly to gold, and analogized the situation to a restaurant where China, the chef, lends the United States money to eat at its establishment. Pretty soon, he said, there will be other customers, like India, who can pay outright.
Second, some also claim that “we’re not printing money” because “we’re exchanging an asset – a bond – for cash.”
“What they’re not saying is where that bond’s coming from – treasuries. As soon as the government puts it out there, the Fed comes and takes it,” Buckner said. “It’s circular, it’s absolutely circular. So we are printing money.”
The third factor that many say differentiates America is that we are a “productive” country, but Buckner said he disagrees there, as well.
What exactly does America produce these days, he asked? We have Apple, but the products are primarily manufactured overseas. We have a good financial sector, but can we depend on that in tough times? Others cite the country’s many innovators as something we “produce,” but Buckner noted that innovators are “produced” elsewhere, also.
“And everybody says, well you’re not seeing hyperinflation,” Buckner said, but that’s because, “the interest rates are so low, nobody’s putting that cash back into investments in the United States. But they are putting it into desperate countries in Europe. They’re putting it into other investments. And the money’s going out there, so the second Bernanke raises the interest rates, all of the sudden the money sucks back into the United States and we have hyperinflation.”
Beck asked Buckner if we need an “event” of some sort to trigger such a meltdown.
“We’ve had an event, but…we’ve become comfortably numb,” Buckner said. “So there’s been a lot of hidden stuff that’s going on. The treasuries continue to go out, and Bernanke continues to buy debt. [But] anytime he starts to back off the markets freak out, because they know. The markets know. But we don’t, the people don’t. People who are retired, pensioners, elderly, people who are holding money are going to be devastated.”
When Beck asked for a timeline, Buckner said that by January of 2015, if not by October in 2014, we are likely to see “an increase in interest rates which will start the domino.”
“When Bernanke announced that there would be a tapering, the markets just dropped because they knew that even if the interest rates changed one infinitesimal amount, it was the beginning of the domino,” he said.
“How fast do the dominoes go down?” Beck asked.
“Three months,” Buckner replied without hesitation. “You listen to many of the economists — within three months. And it’s going to be perception more than real price. You’re going to see hoarding, you’re going to see fear. It’s not the actuality. So if they can put a glaze over everybody…it’s may slow it down. That”s the problem, is we’re dealing with an illusion. It’s an illusion of what is real. We don’t have the money. So the interest rates go up, you’re going to see a domino.”
I love the situation with the bonds.
The Bonds are printed on the same press as the money and neither is worth the paper they are printed on.
They are buying useless Bonds with useless money.
I don’t know the name of that scam, but that is what it is a scam. The story is correct. The Government is printing money and when it stops we will have that hyper-inflation.
Every dime they print makes every dime you have in the bank worth that much less.
Don’t worry. I saw nothing about the virtual currency we have been using. You know, currency on a computer screen?
No one talks about all of the transactions done by computers in a millisecond. This is the world we live in now. No one uses cash anymore. Everything will be “credits” at some point. Not gonna happen. Example: Bitcoin
But that makes the pre-1964 silver dimes in your hand all the more precious
bump
I have some quarters too.
To try to counter the effects of the recession interest on savings was lowered for one reason so people wouldn't sell off their stocks quickly without enough buyers. Saved the stock market, screwed savers who want to prepare for the future.
Is buying gold or something “real” the only way to protect oneself?
I am not sure what the answer is to preparing oneself to surviving once this hits, but I have been trying to prepare for this.
Have converted my cash into hard assets such as silver, gold, ammo, firearms, canning equipment and food stores. Also equipment for planting and managing my acreage. Also long term storage of diesel fuel. Do have “some” cash on hand.
Have scaled back my beef herd on a scale that my wife and I can manage. Getting to slow to outrun the wilder ones......
Will be adding 30’x 40’ green house with aquaponics included as part of the system. Been growing my own tobacco for the last couple of years and this will be included in the greenhouse.
We have just completed a new 24’ x 16’ hen house with 7 different rooms and have started raising hens and selling meat, pullets and eggs. Raised chickens in the past so not a big thing to get back into it.
Have closed all checking and savings accounts. Will be closing out one 401K/IRA this month and closing the remaining one out next year. Will be completely out of the banking 1s and 0s.
As far as I am concerned, the FERAL Government can kiss my White butt. This country boy will survive one way or another.
“No one talks about all of the transactions done by computers in a millisecond. This is the world we live in now. No one uses cash anymore.”
Here in NJ we’re reverting to a Third-World economy where people work for cash, which they use to pay for the rent on their illegal apartment, groceries in dollar stores/flea markets, and gas for their unregistered, unlicensed cars. The flood of foreigners are showing the remaining American-Americans how to do it...
Faith in God, guns and ammo, tools that work even when the power is out, good land, fresh water source on it, stock - the real kind that you can eat or work - a good wife, children, and a community of like minded folks.
In a hyper inflationary scenario, the price of stocks goes up just as dramatically as everything else. You’ll be seeing the Dow at 100,000 and it won’t mean a damned thing when rent for a 2 bedroom flat in an average part of town costs $6,000 a month, and bread costs $7 a loaf - on the way to $60,000 a month rent at $70 loaves of bread.
The numbers wouldn’t look so good for the administration if they included food and energy costs in the calculation for inflation.
In the local grocery store I just saw a 12 ounce package of brand name bacon for more than $12 !!!
Rather than a period of hyperinflation, the actual default will be covered by re-issuance of a new currency. That currency will be an America’s Dollar which will be used by Canada and Mexico, thus ushering in NAFTA. By re-issuing a common currency, the USA like the big powers in Europe, the problem of a devalued currency can be avoided on the surface. The only problem American’s will see is 5-6% inflation, not hyperinflation.
Your scenerio is what happens if everyone buys stocks. In order to prepare for that possibility about the only thing to do is have all major purchases done and for the lucky few have the means to be self sufficient.
Hyperinflation Ping.
fyi, cash is basically a zero coupon, infinite maturity bond.
Think about it.
The volume does not have to be heavy al all to see the price of stocks go up as I describe, because it is not so much that stocks are worth more, but that the dollar is worth less. Or, perhaps, worthless. Just like bread. is a $60 loaf of bread any more nourishing or tastier than a $2 loaf of bread? No. Nor does there have to be a huge increase in bread buying. It’s just that more dollars are chasing goods, and sells won’t let them go for less than it will cost them to replace the flour, yeast etc, and pay their bakers. As the carousel spins out of control.
In 2010, I bought 50lbs of frozen bacon for $1.49/lb; now it’s over $8.79/lb.
I just bought 1.7 lbs of Perdue chicken breast for $10.18, and they were asking $2.19 for a 6 ounce can of solid white tuna.
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